The Market Street power plant, an idle behemoth with hulking twin smokestacks sitting on 20 acres of riverfront property near the Ernest N. Morial Convention Center, will go up for public auction this fall, according to records on file with the Orleans Parish Sheriff’s Office.
The property’s owner, Market Street Properties LLC, apparently was not able to meet the terms of a reorganization plan hashed out in bankruptcy court. So the company’s mortgage lender has decided to foreclose on the plant, a move that could clear the way for other development ideas after years of stalled plans.
The Sheriff’s Office this week began the process of notifying the attorneys for Market Street Properties that Victoria Land & Development LLC has filed a writ of seizure and sale against it.
The auction is set for Sept. 24.
Market Street Properties owes at least $15 million in principal, interest and fees to Victoria Land & Development for payments related to two mortgage loans, according to court filings.
John Mannone, a member of the management committee for Market Street Properties, did not return a call Friday seeking comment.
It is not clear whether Victoria Land & Development intends to bid on the property itself. The company’s head, developer Joseph Jaeger Jr., also did not return a call. But Jaeger is part of a team of developers in talks to redevelop a large tract of land nearby.
The Market Street property, at South Peters and Market streets, is just upriver from the 47-acre site close to the river where the convention center is planning a hotel and entertainment district.
The center’s governing board is in discussions with a development team that includes Jaeger, developer Darryl Berger and the Howard Hughes Corp. about the team acting as the master private developer on that project.
The Jaeger-Berger group has proposed, among other things, a large hotel, residences, a performance venue, an executive conference center, various dining areas and a “cultural campus” for research along the 47-acre stretch of land from Henderson Street to Market Street.
An ambitious plan to develop the power plant site with a hotel, condominiums, retail stores and entertainment was dashed in 2009 when Market Street Properties filed for Chapter 11 bankruptcy protection. The company said it had just $4 million in the bank and $26.8 million in debts to nearly 40 creditors. Its only other asset was the power plant itself, which is valued in court filings at $48 million.
The court approved the company’s reorganization plan in 2012.
But a court-appointed trustee, Henry Hobbs Jr., asked Judge Elizabeth Magner to dismiss the bankruptcy case late last year because Market Street Properties was delinquent in filing quarterly operating reports and paying fees to the trustee.
Victoria Land & Development said Market Street also had defaulted on its obligations to that company under the plan.
Magner dismissed the case in May. Sheriff’s Office deputies began this week attempting to notify representatives of the owner of the coming foreclosure auction.
The property, built in 1901, operated for decades as an Entergy power plant. It has been idle since 1973.
The Market Street Properties developers bought the building from Entergy in 2006 for $10 million. They had planned to use Gulf Opportunity Zone bonds to turn it into a residential and entertainment destination. But the plans stalled.
Market Street filed for bankruptcy after one of its mortgage creditors tried to collect on a note that was past due. That creditor, Florida real estate lawyer Burt E. Eisenberg, eventually transferred his stake in the property to Jaeger’s Victoria Land.